Does France Need More Taxes or More Engaged Workers?

by Kristjan Archer

Attempting to quell five months of street protests, French President Emmanuel Macron announced last week that he would cut income taxes and reform pensions -- in addition to his earlier promises to raise the minimum wage. Macron's concessions, including the modest impact of his labor code reforms, will cost the French government roughly 10 billion euros ($11.4 billion).

But instead of levying more taxes on businesses to pay for the plan, French leaders may want to consider trying to engage France's actively disengaged workers, who are costing the country billions in lost productivity. In 2018, more than one in five French workers (21%) were actively disengaged in their work -- one of the highest rates in Western Europe.

Gallup defines engaged employees as those who work with passion and feel a profound connection to their company; they drive innovation and move the organization forward. Actively disengaged employees, on the other hand, are damaging to an organization. They monopolize managers' time; have more on-the-job accidents; account for more quality defects; contribute to "shrinkage" or theft; are sicker; miss more days; and quit at a higher rate than engaged employees do.

Gallup estimates that actively disengaged employees in France cost organizations between 90 billion and 102 billion euros ($101 billion to $115 billion) in lost productivity. This loss is not isolated to France; Gallup estimates in its State of the Global Workplace report that among the global workforce, $7 trillion in lost productivity is attributable to disengagement.

If France moved 4% of its total workforce who are actively disengaged to the engaged category, it could add a nationally cumulative 18 billion euros ($20.4 billion) to French organizations' bottom lines. The taxes generated from such an increase in productivity would amount to an increase of 6 billion euros ($6.8 billion) in tax revenue for the French government without increasing the burden on the French citizen.

Converting 4% of France's workforce from actively disengaged to engaged would raise its percentage of engaged workers to 12%, putting France on par with the Netherlands (12%), Ireland (12%) and the United Kingdom (14%) in relation to the percentage of the workforce that is engaged.

Employee engagement is a challenge that both the private sector and government could work together to address. Through creating programs and initiatives that focus on helping employees to find a greater purpose in their work, France could help raise its workforce's engagement levels to improve bottom lines and build greater prosperity for the larger population.

The Takeaway

Workforce engagement is not an immovable figure. Gallup has found shifts of engagement in other countries, as in the United States, where employee engagement was at a record high in Gallup's trend in 2018. While the debate rages in the French National Assembly about where to find the necessary government funding, it is important to note that before his presidency, Macron faced several roadblocks when attempting to push similar reforms while he was minister of the economy under President François Hollande. Perhaps the government could broaden its horizons and look at other alternatives to generate revenue.